I think what you are seeing is the bottom half of the market in San Diego and much of Southern California basically becoming an unmitigated disaster. The top half of the market not as much. I like reading this blog for the regular updates from the resident SDRealtors and how the more desirable areas are performing. This housing correction is different than any other housing correction in California primarily due to it not stemming from a recession. This downturn stemmed from a credit bubble, a really really big credit bubble. That’s what makes it so interesting, we have no historical context to gauge where this thing is going and how each segment of the market will perform.
The thing that has been lacking in this correction is a profound shift in psychology. People in the top half of the market obviously don’t see the inherent risk in the market so they keep paying those prices. I think we are at a point right now where the market is becoming so bad and the news so prevalent that we actually crack through denial in all segments. People understand “Record High Foreclosures in California”. That’s not confusing. We are now entering a phase where Mr Sunny Happy Face Realtor (no offense to any realtors on this board) can no longer hide and spin the disaster that is unfolding right now. I would like to see how the top half of the market will perform once we get through this inevitable shift in psychology. I would also like to add that I don’t think that California will escape recession which would take this market to the next level in the correction.
